2.4 million Payment Protection Insurance [PPI] claims to be reopened?

The campaign to reopen rejected Payment Protection Insurance claims looks more likely than ever to succeed as the weight of evidence identifies that many claims were not dealt with appropriately the first time round. The potential consumer detriment is so significant it would be unjust if previously rejected cases were not reopened.

Why do I support the campaign?

The fear is that banks have rejected large numbers of valid PPI complaints and all the information from a variety of sources is showing that consumers who had already been sold inappropriate products have been put to further distress, both emotionally and financially, by having genuine claims rejected.

What does the evidence show?

In a recent Reuters interview Natalie Ceeney, the Chief Ombudsman at the Financial Ombudsman Service [FOS] confirmed the current position as, “Too many of the banks have not taken enough care on PPI complaint handling. Most of the big banks have outsourced it. The problem if you outsource is that you have to pay huge amounts of care to make sure your outsourcers are working to the right standards.” The Financial Conduct Authority [FCA] clearly shares the concerns of FOS as the recent Lloyds TSB news release in respect of its 2013 half year result showed that the Bank had been referred to the FCA Enforcement Team of the FCA for investigation over its governance of a third party supplier and failings in the PPI complaint handling process.

The numbers speak for themselves!

There have been around 2.4 million rejected claims so far where no appeal was made to FOS. If these claims went to appeal, and were upheld at a rate of say 65 per cent, then 1.56 million claims would have succeeded. This shows the significant potential consumer detriment. It is not surprising that consumer groups are lobbying for action.

Who should review the rejected PPI cases?

It will be interesting to see if the banks are allowed to review the rejected cases themselves. There will be those who will argue that if a bank is suspected of rejecting valid claims, either deliberately or through poor systems and controls that they should not be allowed to review their own rejections. Equally, there will be those who would argue that sending the claims to an already overstretched service managed by FOS would be equally inappropriate. One of the regulatory tools the FCA can employ under the Financial Services and Markets Act [FSMA] is a ‘Skilled Person Review’. Where deemed appropriate, by the FCA, they have the power to commission a review by an independent ‘Skilled Person’: I would suggest that such a course of action is the correct action in these circumstances!

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